New York, 25 June 2010

Banks will be forced to spin off their swaps desks, but US lawmakers also made concessions to Wall Street as they finalised sweeping financial reform in the early hours of Friday morning. Members of Congress also voted to impose a tough proprietary trading ban on deposit-taking banks, new conflict of interest rules and a surprise $19bn levy on the industry in a conference session that lasted longer than this week’s record tennis match at Wimbledon and contained more turgid back-and-forth.

Tim Geithner, US Treasury secretary, welcomed the move by Congress saying it provided “crucial momentum” for global efforts on financial reform.

“As President [Barack Obama] travels to Toronto to attend the G-20 summit, Congress has shown that America is ready to lead by example,” said Mr Geithner.

Praising lawmakers, President Barack Obama said on Friday, “We are poised to pass the toughest financial reforms since the ones we created in the aftermath of the Great Depression.”

Towards the end of the 20-hour debate, Barney Frank, chairman of the House financial services committee, announced the surprise bank fee, saying it was legitimate to ask financial institutions whose “collective errors” had damaged the economy to pay the – unexpectedly high – cost of the reform.

“We think that to go to the Goldman Sachses, JPMorgan Chases, Blackstones … is reasonable,” he said.

Read more at FT.com

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http://link.ft.com/r/8P1R88/1858VH/JUJN/0G44M0/8A4GD4/50/h